Last year Yahoo laid off many of its research team, to the benefit of both Microsoft and Google. Now Marissa Mayer is rebuilding Yahoo Labs with the idea that it can resume cutting edge research.

In recent years Yahoo went through troubled times and the response of the former CEO, Scott Thompson, included cutting funding for Yahoo Labs. As a result the research group led by a former director of DARPA, Ron Brachman, that was set up in 2005 with the mission of "inventing the future of the Internet" was drastically downsized and lost key personnel including the group's leader, Prabhakar Raghavan, who left in 2012 to become vice president of engineering at Google.

Microsoft Research also befitted by snapping up three top Yahoo Researchers - Duncan Watts, author of Six Degrees: The Science of a Connected Age and known for the Watts-Strogatzrandom graph generation model that produces graphs with small-world properties; algorithmic economist David Pennock and John Langford whose area of expertise is machine learning. Together with several other ex-Yahoo researchers they are now part of Microsoft Research's New York City lab.

Marissa Meyer, as a software engineer herself, understands the importance of research for innovation and growth and has already recruited 30 PhDs to Yahoo Labs and plans to hire another 20 by the year-end in the attempt to build it back up. Current vacancies include a research scientist specializing in mobile, a senior principal scientist in personalization and a research scientist in pricing and marketplaces.

Yahoo Labs does appear to have some interesting projects on the go in areas including Human Computer Interaction; Machine Learning; Computational Advertising; and Web Mining and Search. If Marissa Mayer can manage to put research at the heart of the business, Yahoo might experience a real resurgence of fortune.